Krauthammer Gets His Wish

Over the years, I have noticed Charles Krauthammer occasionally talking about what a great idea he thinks raising gasoline taxes through the roof would be. (In fact he has been advocating this for a quarter century now.)

So today, at RealClear Politics, I was only mildly piqued by the title of his latest column: "At $4, Everybody Gets Rational". I took a look at it, not really expecting to end up blogging it, and yet....

You first get a whirlwind tour of the efficiency of the free market as it responds to a crisis from someone who appreciates the effectiveness of capitalism, at least on some level. Not only are Americans driving less, they're looking for fuel efficiency in the cars they buy.

At $4 a gallon, the fleet composition is changing spontaneously and overnight, not over the 13 years mandated by Congress. (Even Stalin had the modesty to restrict himself to five-year plans.) Just Tuesday, GM announced that it would shutter four SUV and truck plants, add a third shift to its compact and midsize sedan plants in Ohio and Michigan, and green light for 2010 the Chevy Volt, an electric hybrid.

So much for arbitrary federal fuel efficiency standards and deadlines pulled out of thin air. Although this fuel shortage is at least partially artificial, we can see that the market is perfectly capable of responding to it effectively without Uncle Sam pointing a gun to our heads.

And then, just as you are beginning to wonder how Kratuhammer is going to defend his high tax mantra in the face of this, you get....

An admission of being in the wrong and an apology?

No!

You get a big gust of carbon dioxide-laden hot air from the same mouth.

You also get, incidentally, a whirlwind tour of another kind: How little an appreciation for how the market works really means to someone who shares the same fundamental morality and politics -- altruism-collectivism -- as the environmentalists. You also see, in the process, how blind or evasive such a person can be to the exact same flaws he just demonstrated in someone else's big government schemes when they certainly would exist in his own.

But instead of doing the obvious -- tax the damn thing -- we go through spasms of destructive alternatives, such as efficiency standards, ethanol mandates, and now a crazy carbon cap-and-trade system the Senate is debating this week. These are infinitely complex mandates for inefficiency and invitations to corruption. But they have a singular virtue: They hide the cost to the American consumer.

This is insanity. For 25 years and with utter futility ..., I have been advocating the cure: a U.S. energy tax as a way to curtail consumption and keep the money at home. In this space in May 2004 (and again in November 2005), I called for "the government -- through a tax -- to establish a new floor for gasoline," by fully taxing any drop in price below a certain benchmark. [He uses $4.00 now. --ed] The point was to suppress demand and to keep the savings (from any subsequent world price drop) at home in the U.S. Treasury rather than going abroad. At the time, oil was $41 a barrel. [This would be $87.00 in 2007 dollars. --ed] It is now $123.

...

Announce a schedule of gas tax hikes of 50 cents every six months for the next two years. And put a tax floor under $4 gasoline... [bold added]

Apparently, the market is spectacular and rational to someone like Krauthammer only when it achieves a goal -- lower demand for gasoline -- that he happens to like. If the market isn't working towards that goal, then it's time to whip out the jawbones and knock some sense into those car-driving dolts.

Individual rights is the first casualty -- why not defend American property rights from nationalization abroad with military force and at home by not confiscating our money in the first place -- and the resourcefulness of the petroleum industry is the second.

What would happen if there were a floor to the price of gas? Oil companies could not compete for customers on price beyond a certain point. In fact, to maximize profits on gasoline, they'd have the perverse "incentive" to make what they charge as close to $4.00 a gallon as possible.

One way I can easily think of to make such prices "necessary" is by not developing any new drilling or refining capacity that might make it cheap to supply gasoline. Hmmm. That sounds oddly familiar. I guess that to the extent that you don't need arcane government regulations and a bloated bureaucracy to strangle the petroleum industry, Krauthammer is right about the "open and honest" efficiency of taxation....

But we'd get those arcane regulations and a bloated bureaucracy anyway.

Either the government would have to hike other taxes to replace this cornucopia of revenue that Krauthammer seems convinced the government would see or it would have to start heavily regulating the private take on a gallon of gas. It would do both, of course.

And as for making sure those greedy oil barons at every damned corner gas station didn't take too much of "our" -- I mean, the government's -- money, its incentive, of, course, would be to squeeze every last cent out of that artificial $4.00 price. And I am sure some officials might want to skim off some of that for themselves -- and there'd be kickbacks to any cooperative station operators, of course.

This would go on and on until someone exposed the corruption "inherent in 'capitalism'" and then we'd probably have Krauthammer telling us that the only way we could "wean ourselves off of oil" would be for the government to get rid of all those regulations and bureaucrats by simply nationalizing the oil industry.

Just because someone calls himself a conservative and claims to dislike government regulations and corruption does not make him a friend of capitalism or individual rights.

Charles Krauthmmer's objective of "weaning" America off of oil is fundamentally the same as that of the Greens. Since oil is something we need -- because it provides us the energy we need to live our lives at the lowest cost -- such a goal is at odds with our well-being and is, as such, immoral and (as I hope I have indicated), impractical to anyone interested in remaining alive and pursuing his happiness.

-- CAV

Updates

Today: Added missing link to column.